As an alternative to purchasing gifts at a retail store, many people purchase gift cards with a specific value for specific merchants (e.g., retailer, online store) to give as gifts to a recipient. Giving gift cards is convenient in that it saves a giver, a person wishing to give a gift to a recipient, time and effort to research and shop for a specific item that the giver believes the recipient would like. It may also avoid situations in which the recipient may not like or does not need the item given to them by the giver, and thus needs to return the item with the merchant for store credit. Gift cards can provide flexibility to the recipient to purchase whatever item they like from the issuing merchant.
However, there are still disadvantages and limitations in using gift cards. Since gift cards are issued by a specific merchant, the recipient is limited to using the gift card only at the issuing merchant. This is because when a giver purchases the gift card with a value of funds, the giver pays the value of funds on the gift card to the issuing merchant, and typical transaction processing occurs between the giver and the issuing merchant. Thus the recipient of the gift card is bound to use the funds on the gift card only at the issuing merchant since the issuing merchant has already received payment for the value of the gift card. The issuing merchant may be a retail store that the recipient does not frequent and it may be troublesome for the recipient to purchase items at the issuing retailer for the sake of using the gift card. For example, the store may be inconvenient for the recipient to get to, or may not have items that are useful to the recipient.
There are some services available that allow a gift card recipient to exchange the gift card for a gift card at another merchant, however, this requires a cumbersome process for exchanging the gift cards. For example, recipient of a first gift card may need to go to a website, enter information about the first gift card, select a new merchant gift card from the gift cards available, mail the first gift card to the service provider and then wait to receive the new gift card. Moreover, there may be limited merchants to choose from for the gift card exchange.
Another problem is that closed systems operated by merchants can generally have unsophisticated fraud detection systems. For example, some small to medium sized merchants may not have the resources or the expertise to implement meaningful or effective fraud detection systems.
Embodiments of the invention address these and other problems, individually and collectively.